Taxpayers will generally seek to avoid an NOL, when possible, because of the loss of tax benefits in the recalculation of income. Year-end tax planning can identify potential NOL situations and possible adjustments to avoid the NOL. When an NOL does occur, a producer has choices as to how to use the NOL and will generally seek the largest tax-savings possible. The best use of an NOL will depend on an individual’s circumstances and may require considerable analysis of the alternatives. The calculations associated with computing an NOL and the amount absorbed in a carryforward/carryback year can be complex and time consuming. Producers should make decisions about the use of an NOL before they file their current year’s tax returns. Competent tax advice, analysis, and planning is essential to make the most of an operating loss.
Organization |
Purdue University Extension |
Publisher |
Purdue University |
Publication Views |
1469 |
Material Type |
Written Material |